Maersk Line in new fuel surcharge to recover $2bn in extra costs from 2020 sulphur cap

Date: Thursday, September 20, 2018Source: Seatrade Maritime News

Maersk Line rolling out a new Bunker Adjustment Factor (BAF) designed to recover increases in fuel related costs from the 2020 0.5% sulphur cap which could exceed $2bn for the container shipping company alone.

The new BAF will replace Maersk’s existing Standard Bunker Adjustment Factor (SBAF) from 1 January 2019 and will be based on two key elements – the fuel price based on average price at key bunker ports, and the trade factor based on fuel consumption for a particular trade covering variables such as transit time, fuel efficiency and trade imbalances.

Maersk said that by combining the two factors it would give customers full predictability on fuel prices both prior to and after 2020. The new BAF will be charged separately from the freight rate

"The 2020 sulphur cap is a game changer for the shipping industry. Maersk preparations to comply are well underway and so are our customers' efforts to plan ahead. The new BAF is a simple, fair and predictable mechanism that ensures clarity for our customers in planning their supply chains for this significant shift,” said Vincent Clerc, cco of AP Moller – Maersk.

Most of Maersk’s fleet will rely on low sulphur fuel to meet the cap, which the company has repeated said is its preferred option, although it has made a limited investment in some scrubbers.

Maersk estimates that the additional cost of meeting the sulphur cap could be in excess of $2bn for the company, with it estimated to cost the industry as a whole some $15bn.